ABOUT DOLLAR GENERAL CORPORATION
Dollar General Corporation has been delivering value to shoppers for 75 years. Dollar General helps shoppers Save time. Save money. Every day!® by offering products that are frequently used and replenished, such as food, snacks, health and beauty aids, cleaning supplies, basic apparel, house wares and seasonal items at low everyday prices in convenient neighborhood locations. With more than 11,000 stores in 40 states, Dollar General has more retail locations than any retailer in America. In addition to high quality private brands, Dollar General sells products from America's most-trusted manufacturers such as Clorox, Energizer, Procter & Gamble, Hanes, Coca-Cola, Mars, Unilever, Nestle, Kimberly-Clark, Kellogg's, General Mills, and PepsiCo. For more information on Dollar General, please visit www.dollargeneral.com.

Dollar General Reports Financial Results for Fiscal 2000 And Restated Results for 1999 and 1998

January 14, 2002

Company Also Reaches Settlement Agreements in Restatement Litigation

GOODLETTSVILLE, Tenn., Jan. 14 /PRNewswire-FirstCall/ -- Dollar General Corporation (NYSE: DG) announced today its audited restated financial statements for its fiscal years ended February 2, 2001 ("2000"), January 28, 2000 ("1999"), and January 29, 1999 ("1998"), and is filing today with the Securities and Exchange Commission its Annual Report on Form 10-K and the proxy statement for its annual meeting to be held on February 20, 2002.

The Company also announced today that it has reached a settlement agreement with the lead plaintiffs in the putative class action and derivative lawsuits that had been filed against the Company following the Company's announcement that it would restate its audited financial statements for 1998 and 1999 and its previously released unaudited financial information for fiscal 2000. As a result of the execution of the settlement agreement relating to the putative class action litigation, the Company has recognized an expense of $162.0 million in the fourth quarter of 2000, which reduced the Company's after tax net income in fiscal 2000 by $99.0 million, or $0.30 per diluted share.

The Company's restated net income and diluted earnings per share for 2000 were $70.6 million and $0.21, respectively, as compared to the $206.0 million and $0.62 previously reported. Excluding the litigation settlement expense, restated net income and diluted earnings per share would have been $169.6 million and $0.51, respectively. In 1999, restated net income and diluted earnings per share were $186.7 million and $0.55, respectively, as compared with the $219.4 million and $0.65 previously reported. In 1998, restated net income and diluted earnings per share were $150.9 million and $0.45, respectively, as compared with the $182.0 million and $0.54 previously reported.

Restatement of Financial Statements

In its April 30, 2001, announcement, based on a preliminary assessment of the accounting issues involved, the Company estimated that the reduction in aggregate earnings as a result of the restatement would be approximately $0.07 per share over the three-year period of 2000, 1999 and 1998. The review completed by the Company of its financial statements ultimately identified a number of accounting issues for restatement in addition to those that formed the basis for the preliminary estimate provided on April 30, 2001. As a result of these additional issues, and following the completion of the Company's review of the issues that had been identified originally, the restatement has resulted in an aggregate effect on diluted earnings per share, excluding the litigation settlement expense, of $0.30 (on a rounded basis) over the three-year period. Over the three-year period, the Company has reduced its diluted earnings per share:

    * by approximately $0.05 to correctly record items impacting cost of goods
      sold that were recorded incorrectly and/or that reflect more accurate
      estimates;
    * by approximately $0.11 to correctly record selling, general and
      administrative ("SG&A") expenses that were either incurred but not
      accrued, or recorded incorrectly;
    * by approximately $0.11 to correctly record additional interest expense
      required as a result of restating certain operating leases as capital
      leases and financing obligations, and the addition of capital lease and
      financing obligation liabilities to the Company' s balance sheets; and
      by approximately $0.02 to correct errors in the Company's tax provision.
Class Action Settlement Agreement

Following the Company's announcement on April 30, 2001, that it would restate its audited financial statements for fiscal 1999 and 1998 and its previously released unaudited financial information for fiscal 2000, more than 20 purported class action lawsuits were filed against the Company and certain current and former officers and directors of the Company, asserting claims under the federal securities laws. These cases were consolidated in federal court in Tennessee, and the court appointed the Florida State Board of Administration and the Teachers' Retirement System of Louisiana as lead plaintiffs under the Private Securities Litigation Reform Act of 1995 (the "Class Action").

The Company has reached a settlement agreement with the lead plaintiffs in the Class Action, pursuant to which the Company has agreed to make a cash payment to the class and to implement certain enhancements to its corporate governance and internal control procedures. The settlement agreement resolves all outstanding shareholder claims brought in the Class Action and is subject to confirmatory discovery by the plaintiffs and to court approval. As a result of the execution of the settlement agreement, the Company has recognized an expense of $162.0 million in the fourth quarter of 2000. The Company expects to receive from its insurers approximately $4.5 million in respect of the class action settlement, which amount has not been accrued in the Company's financial statements.

A number of purported shareholder derivative lawsuits have also been filed in Tennessee state and U.S. federal courts against certain current and former Company directors and officers and Deloitte & Touche LLP, the Company's former independent accountant.

The Company and the individual defendants have reached a settlement agreement with counsel to Michael Dixon, Jr., Carolinas Electrical Workers Retirement Fund and Thomas Dewey, the lead plaintiffs in the lead Tennessee state shareholder derivative action. The agreement includes a payment to the Company from a portion of the proceeds of the Company's director and officer liability insurance policies as well as certain corporate governance and internal control enhancements. Pursuant to the terms of such agreement, the Company anticipates that all other shareholder derivative lawsuits, which are currently stayed, will be dismissed with prejudice by the courts in which they are pending. Such agreement is subject to confirmatory discovery and to court approval. If the settlement agreement is approved, the Company expects that it will result in a net payment to the Company, after attorneys' fees payable to the plaintiffs' counsel, of approximately $24.8 million, which amount has not been accrued in the Company's financial statements.

2000 Results of Operations

Net sales totaled $4.55 billion for 2000 compared with $3.89 billion for 1999, an increase of 17.0 percent. The increase resulted primarily from 706 net new stores and a same-store sales increase of 0.9 percent. During the year, the Company opened 758 new stores, relocated or remodeled 237 stores and closed 52 stores.

Gross profit for 2000 was $1.25 billion, or 27.5 percent of sales, compared with $1.09 billion, or 28.1 percent of sales in 1999.

SG&A expense for 2000 was $934.9 million compared with $772.9 million in 1999, an increase of 21.0 percent. As a percentage of sales, SG&A expense was 20.5 percent in 2000 compared with 19.9 percent in 1999.

In 2000, interest expense was $45.4 million compared with $25.9 million in 1999. The increase in interest expense in 2000 resulted from the net addition of $213.6 million in various long-term obligations during 2000, including $200 million of 8 5/8 percent notes, issued in June 2000 to repay outstanding short-term borrowings and for general corporate purposes. The Company's total debt as of February 2, 2001, was $729.8 million compared with $516.2 million as of January 28, 2000, which includes synthetic lease balances of $383.2 million and $413.3 million, respectively.

The effective income tax rates for 2000 and 1999 were 35.0 percent and 36.7 percent, respectively. The reduction in the effective tax rate in 2000 was due to the 38.9 percent marginal tax rate applied against the litigation settlement expense. Excluding the tax impact of the litigation settlement expense, the effective tax rate in 2000 was 37.3 percent.

Net LIFO merchandise inventories increased 6.3 percent to $1.01 billion at February 2, 2001, from $0.95 billion at January 28, 2000.

Capital expenditures for 2000 totaled $216.6 million, compared with $142.1 million for 1999. The Company opened 758 new stores and relocated or remodeled 237 stores at a cost of $112.7 million in 2000, compared with opening 646 new stores and relocating or remodeling 409 stores at a cost of $72.7 million in 1999. The increase in 2000 in store-related capital expenditures was due principally to the construction of approximately 72 Company-owned stores. Distribution-related capital expenditures totaled $49.3 million in 2000, resulting primarily from costs associated with the new distribution centers in Alachua, Florida and Zanesville, Ohio. Capital expenditures during 2001 are projected to be approximately $135 million, and the Company anticipates funding its 2001 capital requirements with cash flows from operations.

Dollar General operates more than 5,550 neighborhood stores in 27 states and operates distribution centers in Florida, Kentucky, Mississippi, Missouri, Ohio, Oklahoma and Virginia.

This press release contains historical and forward-looking information. The words "believe," "anticipate," "project," "plan," "expect," "estimate," "objective," "forecast," "goal," "intend," "will likely result," or " will continue" and similar expressions identify forward looking statements. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company believes the assumptions underlying these forward-looking statements are reasonable; however, any of the assumptions could be inaccurate, and therefore, actual results may differ materially from those projected in the forward-looking statements. The factors that may result in actual results differing from such forward-looking information include, but are not limited to: the Company's ability to maintain adequate liquidity through its cash resources and credit facilities, including its ability to refinance or replace such facilities on favorable terms at the maturity thereof; the Company's ability to comply with the terms of the Company's credit facilities (or obtain waivers for non- compliance); general transportation and distribution delays or interruptions; inventory risks due to shifts in market demand; changes in product mix; interruptions in suppliers' businesses; fuel price and interest rate fluctuations; a deterioration in general economic conditions caused by acts of war or terrorism; temporary changes in demand due to weather patterns; delays associated with building, opening and operating new stores; the results of the Company's restatement and audit process; and the impact of the litigation and regulatory proceedings related to the restatement of the Company's financial statements, including the funding of the settlement of such litigation and the risk that the conditions to the effectiveness of such settlements, including the results of the plaintiffs' confirmatory discovery and the approval by the courts, may not be realized.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this release or to reflect the occurrence of unanticipated events.

                           DOLLAR GENERAL CORPORATION
                 AUDITED INCOME STATEMENTS & KEY OPERATIONAL DATA
                                     (000's)

                                         Income Statements For the Year Ended
                                                      (restated)  (restated)
                                           February 2  January 28  January 29
                                              2001        2000        1999

    Sales                                  $4,550,571  $3,887,964  $3,220,989

    Cost of Sales                           3,299,668   2,794,466   2,328,470

    Gross Margin                            1,250,903   1,093,498     892,519

    SG&A Expense                              934,899     772,928     639,534

    Litigation Settlement Expense             162,000           0           0

    Operating Income                          154,004     320,570     252,985

    Interest Expense                           45,357      25,873      13,976

    Pre-Tax Income                            108,647     294,697     239,009

    Taxes                                      38,005     108,024      88,075

    Net Income                                $70,642    $186,673    $150,934

    Diluted earnings per share                  $0.21       $0.55       $0.45

    Weighted average diluted shares           333,858     337,904     335,763


                                                  KEY OPERATIONAL DATA
                                           February 2  January 28  January 29
                                              2001        2000        1999
    Sales by Category:
       Highly Consumable                   $2,518,052  $1,996,454  $1,364,032
       Hardware and Seasonal                 $706,140    $640,791    $604,485
       Basic Clothing                        $554,117    $482,390    $391,609
       Home Products                         $772,262    $768,329    $860,863
         TOTAL SALES                       $4,550,571  $3,887,964  $3,220,989



                            DOLLAR GENERAL CORPORATION
                                  BALANCE SHEETS
                                     ($000's)
                                   (Unaudited)

                                                       (restated)  (restated)
                                           February 2  January 28  January 29
                                              2001        2000        1999
    Assets
    Current Assets:
      Cash and cash equivalents              $162,310     $54,742     $27,643
      Merchandise inventories                 896,235     952,432     793,596
      Deferred income taxes                    21,514      20,486      15,576
      Other current assets                     44,868      46,455      31,104
            TOTAL CURRENT ASSETS            1,124,927   1,074,115     867,919

    Property & equipment, at cost           1,339,554   1,109,376     706,790
      Less:  Accumulated depreciation and
       amoritization                          366,460     271,987     207,042
      Net property and equipment              973,094     837,389     499,748

    Merchandise inventories                   116,000           0           0
    Deferred income taxes                      52,708           0           0
    Other assets, net                          15,733      12,124       8,345

    TOTAL ASSETS                           $2,282,462  $1,923,628  $1,376,012

    Liabilities & Shareholders' Equity
    Current Liabilities
      Current portion of long-term
       obligations                             $9,035      $1,828        $725
      Accounts payable                        297,262     344,598     266,596
      Accrued expenses                        214,192     166,290     168,168
      Income taxes                             17,446      26,991      22,866
            TOTAL CURRENT LIABILITIES         537,935     539,707     458,355

    Long-Term obligations                     720,764     514,362     221,694
    Deferred income taxes                           0      24,206      21,557
    Litigation settlement payable             162,000           0           0
    TOTAL LIABILITIES                       1,420,699   1,078,275     701,606

    Stockholders' Equity:
      Preferred stock                               0           0         858
      Common stock                            165,646     165,411     164,073
      Additional paid-in capital              283,925     229,906     363,212
      Retained earnings                       414,318     450,036     346,790
      Less: Treasury stock                          0           0     200,527
            Common stock purchased by
             employee deferred compensation
             trust                              2,126           0           0
    TOTAL STOCKHOLDERS' EQUITY                861,763     845,353     674,406

    TOTAL LIABILITIES AND
    STOCKHOLDERS' EQUITY                   $2,282,462  $1,923,628  $1,376,012


                           DOLLAR GENERAL CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (000's)
                                  (Unaudited)


                                                 For the Year Ended
                                                     (restated)  (restated)
                                         February 2  January 28  January 29
                                            2001        2000        1999
    Cash flows from operating
     activities:
     Net income                             $70,642    $186,673    $150,934
     Adjustments to reconcile net income
      to net cash
        provided by (used in) operating
         activities
      Depreciation and amortization         111,399      79,707      57,414
      Deferred income taxes                 (77,942)     (2,261)     (3,889)
      Tax benefit from stock option
       exercises                             19,018      30,287      32,252
      Litigation settlement                 162,000          --          --
      Change in operating assets and
       liabilities:
        Merchandise inventories             (59,803)   (158,836)   (171,239)
        Other Current Assets                  4,650     (15,351)    (11,230)
        Accounts payable                    (47,336)     78,002      86,623
        Accrued expenses and other           39,391      (2,144)     14,931
        Income taxes                         (9,545)      4,125      20,640
        Other                                 3,031      (3,480)     (2,745)
           Net cash provided by (used
            in) operating activities        215,505     196,722     173,691

    Cash flows provided by (used in)
     investing activities:
     Purchase of property and equipment    (216,584)   (142,070)   (143,382)
     Proceeds from sale of property and
      equipment                              97,612       3,051         222
           Net cash provided by (used
            in) investing activities       (118,972)   (139,019)   (143,160)

    Cash flows provided by (used in)
     financing activities:
     Issuance of short-term borrowings      220,000     295,324     165,000
     Repayments of short-term borrowings   (220,000)   (295,324)   (186,933)
     Issuance of long-term debt             199,595      22,848      72,257
     Repayments of long-term debt          (112,276)     (7,705)     (2,667)
     Payment of cash dividend               (42,237)    (33,791)    (26,661)
     Proceeds from exercise of stock
      options                                34,130      38,797      30,727
     Repurchase of common stock             (62,988)    (50,753)    (73,236)
     Purchase of common stock for
      deferred compensation plan             (2,126)          0           0
     Settlement of derivative financial
      instruments                            (3,063)          0           0
     Transfer to ESOP                             0           0         755
           Net cash provided by (used
            in) financing activities         11,035     (30,604)    (20,758)

    Net increase (decrease) in cash and
     cash equivalents                       107,568      27,099       9,773
    Cash and cash equivalents beginning
     of period                               54,742      27,643      17,870
    Cash and cash equivalents end of
     period                                $162,310     $54,742     $27,643

     Purchase of property and equipment
      under capital lease obligation       $126,290    $272,233    $120,863
     Conversion of preferred stock to
      common stock                         $     --    $200,527    $     --



                            DOLLAR GENERAL CORPORATION
                              EFFECTS OF RESTATEMENT

                                         Year Ended February 2, 2001
                                                                  As Restated
                                                                   Excluding
                                    As     Restatement             Litigation
                                Previously   Related               Settlement
                                 Reported  Adjustments As Restated   Expense
    Net Sales                   $4,551,511     $(940)  $4,550,571
    Cost of goods sold           3,293,126     6,542    3,299,668   3,299,668
    Gross profit                 1,258,385    (7,482)   1,250,903   1,250,903
    SG&A Expense                   923,760    11,139      934,899     934,899
    Litigation settlement
     expense                            --   162,000      162,000          --
    Operating profit               334,625  (180,621)     154,004     316,004
    Interest Expense                11,508    33,849       45,357      45,357
    Income before taxes on
     income                        323,117  (214,470)     108,647     270,647
    Provisions for taxes on
     income                        117,098   (79,093)      38,005     100,951
    Net income                    $206,019 $(135,377)     $70,642    $169,696

    Diluted earnings per share       $0.62    ($0.41)       $0.21       $0.51
    Weighted average diluted
     shares (000)                  333,858        --      333,858     333,858


                                   Year Ended January 28, 2000
                                          Restatement
                                    As
                                Previously   Related
                                 Reported  Adjustments As Restated
    Net Sales                   $3,887,964  $      --  $3,887,964
    Cost of goods sold           2,790,173      4,293   2,794,466
    Gross profit                 1,097,791     (4,293)  1,093,498
    SG&A Expense                   748,489     24,439     772,928
    Operating profit               349,302    (28,732)    320,570
    Interest Expense                 5,157     20,716      25,873
    Income before taxes on
     income                        344,145    (49,448)    294,697
    Provisions for taxes on
     income                        124,718    (16,694)    108,024
    Net income                    $219,427   $(32,754)   $186,673

    Diluted earnings per share       $0.65     ($0.10)      $0.55
    Weighted average diluted
     shares (000)                  336,963        941     337,904


                                   Year Ended January 29, 1999
                                    As      Restatement
                                Previously   Related
                                 Reported  Adjustments  As Restated
    Net Sales                   $3,220,989  $      --  $3,220,989
    Cost of goods sold           2,315,112     13,358   2,328,470
    Gross profit                   905,877    (13,358)    892,519
    SG&A Expense                   616,613     22,921     639,534
    Operating profit               289,264    (36,279)    252,985
    Interest Expense                 8,349      5,627      13,976
    Income before taxes on
     income                        280,915    (41,906)    239,009
    Provisions for taxes on
     income                         98,882    (10,807)     88,075
    Net income                    $182,033   $(31,099)   $150,934

    Diluted earnings per share       $0.54     ($0.09)      $0.45
    Weighted average diluted
     shares (000)                  335,498        265     335,763


                           DOLLAR GENERAL CORPORATION
                             EFFECTS OF RESTATEMENT
                    REDUCTIONS OF DILUTED EARNINGS PER SHARE

                                        Three-Year  Feb. 2   Jan. 28  Jan. 29
                                        Cumulative   2001      2000     1999
    Cost of Goods Sold                     ($0.05)  ($0.01)  ($0.01)  ($0.03)
    SG&A Expense                           ($0.11)  ($0.02)  ($0.05)  ($0.04)
    Interest Expense                       ($0.11)  ($0.06)  ($0.04)  ($0.01)
    Tax Provision                          ($0.02)  ($0.01)  ($0.00)  ($0.01)
    Total Restatement Accounting
     Adjustments*                          ($0.30)  ($0.11)  ($0.10)  ($0.09)
    EPS Impact of Litigation Settlement    ($0.30)  ($0.30)       0        0
    TOTAL                                  ($0.60)  ($0.41)  ($0.10)  ($0.09)

    * Totals may not foot due to rounding
SOURCE Dollar General Corporation

CONTACT: investors, Kiley Fleming, CFA, +1-615-855-5525, or media, Andrea Turner, +1-615-855-5209, both of Dollar General Corporation

URL: http://www.dollargeneral.com


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